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Buyers forking out thousands due to down valuations

Down valuations causing chaos, movers staying put and fee-free deals on the rise - we’ve got all you need to know in this fortnight’s mortgage update.

mortgagesHuge rise in down valuations

The number of down valuations – whereby a mortgage lender’s valuer will value a property at less than the amount the buyer has agreed to pay for it – has increased from one in 20 just two years ago to one five today, according to hybrid estate agents eMoov and also London and Country mortgage brokers.

Some experts warn this conservative behaviour may reflect nervousness from lenders about the state of the housing market and be a deliberate move by banks and building societies to protect themselves from house prices dropping in the near future. While others blame estate agents for offering sellers flattering sale prices to secure their business. During March this year, 86 per cent of properties sold for less than the asking price — the highest level since records began in 2013, according to the National Association of Estate Agents.

Paula Higgins, chief executive, HomeOwners Alliance says: “If you genuinely believe the valuation is incorrect, don’t be afraid to challenge it. Some valuers will be overly cautious, taking thousands of pounds off a property’s value at the drop of a hat. If you think the figure is wrong or you have evidence of local sale prices to the contrary, then question it.”

See our advice on what to do if your lenders advice is lower than the amount you’re paying

Homemovers paying 70k more than five years ago

Buyers moving up the housing ladder are paying a whopping 35% more for their next home than they were five years ago, latest research has revealed.

According to the latest Lloyds Bank Homemover Review, the average price paid by homemovers has grown by £77,457 from £219,479 in 2013, to £296,936 in 2018 – a record high.

Regionally, the study found, in East Anglian, the average price a homeowner pays has grown by a 46% since 2013 while buyers in Greater London and the South East are paying 45% more than they were. Perhaps unsurprisingly therefore the number of people moving home has dipped in the first half of the year and now accounts for only around half (49%) of the housing market.

Andrew Mason, mortgage products director at Lloyds Bank, says:  “Despite continuing low mortgage rates, the homemover market has stabilised with little movement in the first half of this year to leave first-time buyers now driving housing activity. This may be in part due to the Help to Buy scheme enabling first-time buyers to purchase a new property, combined with the low availability of the ‘right type’ of homes for those looking to move up the housing ladder. The costs of moving house and potential further interest rate rises may also be weighing on potential homebuyers’ minds.”

Something for nothing?

An interest rate rise may be on the horizon but mortgage borrowers still have something to be thankful for, according to latest research.

Figures from Moneyfacts have revealed that the number of fee-free deals in the market has increased by 274 since start of the year, meaning there are now 2,007 mortgages without an arrangement fee on offer.

Charlotte Nelson, finance expert at says: “Providers have opted to keep rates relatively static, choosing to wait and see if a base rate rise will come to fruition. By reducing some of their fees to zero, providers are able to remain competitive among their rivals.”

Paula Higgins, chief executive, HomeOwners Alliance, says: “With any financial product, but particularly mortgages, it’s important to take ‘freebies’ with a pinch of salt. While it’s great that some lenders are removing arrangement fees, you should always check out the finer details of the product before moving forward. Fee-free usually means there’s no arrangement fee but you’ll probably still have to pay legal fees, a valuation fee and possibly a booking fee. It’s essential you consider the overall cost of the mortgage.”

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